Filing Of Returns (Project Paper Created As Partial Fulfillment For The Internal Assessment In The ‘Corporate Tax Planning’ Paper (Finance) ) Kaushik Bannerjee (Roll No: ) Sayudh Sarkar (Roll No: 14) Return Of Income – The Concept Prior to moving into our main topic, viz, ‘return of income’, we need to have a clear idea as to what the term ‘income’, in context with taxation, connotes. Hence, at the outset, we define ‘Gross Total Income’ of any individual as the sum of the cash-inflows that (s)he receives under the different heads of income (Income from House Property, Salaries, Profits and Gains from Business, and Income from other sources). Return of income, in turn, can be explained as the declaration of income by the assessee in the prescribed format (as per the Income Tax Act). Any statement of income returns needs to have the particulars of income earned under different heads, gross total income, deductions from the gross total income, total income and tax payable by the assessee. In particular, the CBDT (Central Board For Direct Taxes) notifies the assesses regarding the correct format for filing income returns. Filing of return of income is compulsory, as per Section 139(1) of the Income Tax Act, for the following cases: Companies and firms they have to file a return of income or loss for every previous year on or before the due date, in the prescribed format, Person other than a company or a firm Filing of return on or before the due date is mandatory, if his/her total income or the total income of any other person in respect of which (s)he is assessable under the Act during the previous year exceeds the basic exemption limit, In continuance with the earlier group of people, they must furnish a return of his income or the income of such other person during the previous year, and verified too, in the prescribed format, Individual/Hindu Undivided Family/Association Of Persons/BOI/Artificial juridical persons Filing of returns is mandatory if the total income of such assessees: a) Exceeds the basic exemption limit, and b) Filing required, without giving effect to the provisions of 10A or 10B or 10BA or Chapter VI-A of the Income Tax Act The ‘due date’ in this context, refers to: i) September 30 (for a company, person (other than company) whose accounts are required to be audited under the Income Tax Act, and any working partner of such firms, whose accounts need to be similarly audited), or ii) July 31 (in case of any other assessee). Filing Of Returns – Different Channels And Options A) RETURN OF INCOME TO EMPLOYER (u/s 139(1A), Income Tax Act) This section gives an option to a person, being an individual who is in receipt of income chargeable under the head ‘Salaries’, to furnish a return of his income for any previous year to his employer. The employer, on his/her part, has to furnish all returns of income received by him on or before the ‘due date’ (explained before). B) RETURN OF INCOME TAX THROUGH COMPUTER READABLE MEDIA (U/S 139(1B), Income Tax Act) This section enables the tax-payer to file his/her return of income in computer readable media. The assessee can be both a corporate or a non-corporate person. Such return of income needs to be in accordance with such scheme, as may be defined by the CBDT. C) RETURN OF LOSS (u/s 139(3), Income Tax Act) This section requires the assessee to file a return of loss, in the same manner as in the case of return of income, within the time allowed under Section 139(1) of the Act. An assessee cannot carry forward or set off his losses against income in the same or subsequent year, unless he has filed a return of loss in accordance with the provisions of Section 139 (3) (This is as per the directions mentioned in Section 80 of the Income Tax Act). However, losses under the head ‘Income from house property’, under Section 71B, and ‘Unabsorbed depreciation’, under section 32, can be carried forward for set-off, even though return of loss has not been filled before the due date. D) BELATED RETURN (u/s 139 (4), Income Tax Act) Any person who has not furnished a return within the time allowed to him/her, as per Section 139(1), or within the time allowed under a notice issued under Section 142(1) has the additional option of: a) Filing returns prior to the expiry of one year from the end of the relevant assessment year, or b) Before the completion of the assessment, whichever is earlier. However, no ‘belated return’ can ever be revised (except under section 139(1), or under notices of section 142(1)). E) RETURN OF INCOME OF CHARITABLE TRUSTS AND INSTITUTIONS (U/S 139 (4A), Income Tax Act) This provision of filing returns includes every person who receives income, that is derived from property, held under trust or any other legal obligation, wholly or partly for charitable or religious purpose. Incomes received by way of voluntary contributions are also covered under this section. Returns under this head must be filed by the representative-assessee voluntarily within the time limit. Penalties and interest charges would be levied in case of any rule-violation in this regard by the assessee. F) RETURNS BY UNIVERSITIES, COLLEGES, ETC. (Mandatory) (u/s 139 (4D), Income Tax Act) This section states, it would be mandatory for every university, college, or any other institution referred to in clause (ii) and (iii)of Section 35(1), to furnish its return in respect of its income or loss in every previous year. These institutions would not be required to furnish its return of income or loss under any other provision of Section 139. G) RETURN OF INCOME OF POLITICAL PARTIES (u/s Section 139 (4B), Income Tax Act) As per this section, a political party is required to file a return of income if, before claiming exemption under Section 13A, the party has taxable income. There are certain conditions under which exemptions from income-tax can be claimed by a political party. For such exemptions to be allowed, the political party has to submit a return of its total income within the time limit prescribed under Section 139(1). In addition, the chief executive officer of the political party is statutorily required to furnish a return of income of the party for the relevant assessment year. This provision is for cases where the amount of total income of the previous year exceeds the basic exemption limits, before any exemption is claimed (under Section 13A). H) FILING OF RETURNS BY SCIENTIFIC RESEARCH ASSOCIATIONS, NEWS AGENCY, TRADE UNIONS, ETC. (Mandatory) (u/s 139 (4C), Income Tax Act) The following associations/institutions must compulsorily file the return of their income: Scientific Research Associations (u/s 10(21)) News Agencies (u/s 10(22B)) Associations or Institutions (u/s 10(23A)) Institution (u/s 10(23B)) Fund or Institution (u/s 10(23C) (iv)) Trust or Institution (u/s 10(23C) (v)) University or other educational institution (u/s 10(23C) (vi) (iiiad)) Hospital or other medical institution (u/s 10(23C) (via) (iiiae), and Trade Unions (u/s 10(24)(b) The provisions under this section are applicable in a similar manner to those present under Section 139 (1) of the Income Tax Act. I) REVISED RETURN (u/s 139 (5), Income Tax Act) If any person, having furnished a return under Section 139 (1), or as per the notices related to Section 142 (1), finds out any omission, or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year, or before the date of assessment-completion, whichever is earlier. J) DEFECTIVE RETURN (U/S 139 (9), Income Tax Act) Under this section, the Assessing Officer has the power to call upon the assessee to rectify a defective income return. He can point out the defect in the return to the assessee, and give the latter an opportunity to rectify the defect within a period of 15 days from the date of such intimation. In case the assessee provides a special application, the Assessing Officer can extend this period by a further 15 days, on his own discretion. However, if the defect is not corrected within the period of 15 days or such extended period, the return would be considered as an invalid return. The Assessing Officer can condone this delay, though, if the defect is rectified before the actual assessment is made. Any income-return has to be filed, along with the following documents: A statement showing the computation of the tax payable on the basis of the return, The report of the Audit (under section 44AB), Proofs regarding the tax, if any, claimed to have been deducted or collected at source, and the advance tax and tax on self-assessment, if any, claimed to have been paid, and Proof of the amount of compulsory deposit, if any, claimed to have been paid under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974. Scheme For Submission Of Returns Through Tax Return Preparers For the purpose of enabling any specified class(es) of persons to prepare and furnish their returns of income, the CBDT may notify a Scheme to provide that, such persons may furnish their returns of income through a Tax Return Preparer. Incidentally, a Tax Return Preparer can be person except a chartered accountant, a legal practitioner entitled to practice in Indian civil courts, an employee under the ‘specified class(es) of persons, or any officer of scheduled banks, where the assessee maintains a current account or has other regular dealings. Authorised Signatories To The Return Of Income (as per Section 140, Income Tax Act) When the assessee is an ‘Individual’, the authorised signatory can be: The individual himself, Any person duly authorised by him, His/her guardian, and Any other person competent to act on his/her behalf. When the assessee is a ‘Hindu Undivided Family’, the authorised signatory can be: The ‘Kurta’, or Any other adult member of the HUF. When the assessee is a ‘Company’, the authorised signatory can be: The managing director of the company, Any director of the company, A person who holds a valid power of attorney, Liquidator, or The Principal Officer of the company. When the assessee is a ‘Firm’, the authorised signatory can be: The managing partner of the firm, or Any partner of the firm, not being a minor When the assessee is a ‘Local Authority’, the authorised signatory is the Principal Officer. When the assessee is a ‘Political Party’, the authorised signatory is the Chief Executive Officer. When the assessee is a ‘Any Other Association’, the authorised signatory is the Principal Officer, or any other person. When the assessee is a ‘Any Other Person’, the authorised signatory is him/herself, or someone competent to act on his/her behalf.. Bibliography: Taxation (Paper 4) – Assessment Year 2009-10 (Board of Studies, The Institute Of Chartered Accountants Of India) Students Guide To Income Tax – Dr.V.K.Singhania http://en.wikipedia.org/wiki/Income_tax_in_India http://www.incometaxindia.gov.in/download_all.asp -------------------------------------------------------------------------------------
"Filing of Returns"